Executive Summary

According to a Morgan Stanley report in March 2008, the annual demand for hybrid cars in the US is expected to reach 1.2 million in 2015; this estimate also included 250,000 plug-in-hybrid electric cars (PHEVs), taking gas prices at US$ 3 per gallon. In March 2009, the US government, led by the President, Barack Obama, unveiled an energy plan with an outlay of US$ 150 billion to develop alternative and clean energy sources, with the government aiming to promote one million PHEVs
by 2015. The plan earmarked US$ 2 billion for battery research and also federal
tax exemptions ranging from US$ 2,500 to US$ 7,500 on the purchase of electric
cars. Pure electric cars that use only battery are fuel-efficient and are less
harmful to the environment.

In the US, the market for electric cars was at a nascent stage as of 2009, with hybrid car sales occupying a major share among the different types of electric cars. As of 2009, many major automakers such as General Motors, Toyota Motor Corporation, and Nissan were planning to mass produce electric cars by 2011. Only a few small automakers were marketing pure electric cars in the US as of 2009, notable among those being Tesla Motors, Inc with its ‘Roadster’ priced at over US$ 100,000. In addition, the US electric car market offered export opportunities to many automakers in other countries such as China.

But pure electric cars had a few disadvantages when compared to conventional gasoline-powered cars. Low speed, limited distance covered on a single battery charge, the lack of infrastructure for charging the batteries, and high costs (upfront costs as well as battery replacement costs) were considered as the main hurdles to the mass adoption of these cars. Nevertheless, the innovations in battery technology, particularly the use of Lithium-ion (Li-ion) batteries, provided an opportunity for their growth. Li-ion batteries offered a longer life and a higher range for a single charge. They also eliminated the environmental hazards caused by the use of other batteries such as nickel-cadmium and lead acid batteries . The emergence of charging infrastructure building companies was expected to boost the sales of electric cars in the US. According to the US Department for Transportation, electric vehicles (EVs) capable of 50 miles per day could meet the needs of 80 percent of the American driving public.

This report considers the perspectives of various stakeholders in the market for pure electric cars in the US, and discusses the opportunities and challenges for the growth of this market.

1] It is a California-based automobiles company that manufactures electric vehicles capable of highway travel and markets these vehicles in North America and Europe. Source: www.teslamotors.com (Accessed on July 24, 2009).2] These batteries are made from lithium, a light and highly reactive metal, and are mostly used to power cell phones and laptops. They possess high energy density, more rechargeable cycles, long life, and lose charge slowly when not in use. Due to these features they are regarded as a suitable choice for electric cars by many automakers.3] Nickel-Cadmium batteries are rechargeable batteries which are widely used commercially and are mostly used in power tools. Source: www.tech-faq.com.4] Lead acid batteries were invented by a French physicist, Gaston Planté, in 1859. They were widely used for many decades in starting car engines and powering the mobility of slow moving vehicles. Source: www.economist.com.5] www.hybridtechnologies.com